Tesla Appears To Be Giving Up On The Middle Class

Tesla
Motors seems farther than ever from hitting the mass market after
announcing Sunday it will cancel production of the cheapest
version of its Model S sedan.

According to a
press release, the demand for the Model S powered by a 40
kilowatt-hours battery is not sufficient to justify production.

Only four percent of customers wanted that version, with an
estimated range of 160 miles, at 55 mph.

For $62,400, the Model S with a 60 kWh battery has a range of 230
miles. The 85 kWh battery model starts at $72,400, and can go
about 300 miles on a full charge.

The weak demand for the small battery model is not surprising, as
the biggest downside to electric cars is their limited range.
Even the most powerful Model S has come under fire for running
out of power: For the review
that sparked a fight with Tesla CEO Elon
Musk, John Broder at the New
York Times drove the version equipped with the largest
available battery pack (85 kWh), which starts at $79,900.

While reasonable, the decision to cancel the 40 kWh Model S
undermines Tesla's insistence that it is not making expensive
toys for wealthy drivers.

The 40 kWh version of the sedan started at $52,400: a bit over
that mark, but not by too much. Now the cheapest Model S is the
one with a 60 kWh battery that starts at $62,400. That's 70
percent of the Roadster's price tag.

The bigger news in Sunday's announcement is that Tesla is
exceeding its previous guidance on auto sales and
turning profitable for the quarter. Canceling the 40 kWh
Model S should help it continue to grow.

But in terms of Tesla's longterm goal, to offer "a full range of
increasingly affordable electric cars," it represents a step
backward.